IGBH - IGBH: Rate-Hedged Investment-Grade Bond ETF Strong 7.5% Yield
2024-07-11 23:45:47 ET
Summary
- IGBH is an interest rate hedged investment-grade bond ETF.
- It has a strong 7.5% yield, and has outperformed most of its peers since inception.
- Although potential Fed cuts are a headwind, the fund trades with a sizable spread to its peers, so outperformance could continue.
A couple months ago I wrote an article about the iShares Interest Rate Hedged Corporate Bond ETF (NYSEARCA: LQDH ). LQDH invests in investment-grade bonds, and hedges its rate risk through interest rate swaps. The iShares Interest Rate Hedged Long-Term Corporate Bond ETF ( IGBH ) does the same but focusing on longer-term bonds. Doing so results in marginally higher yields and returns for IGBH, an important benefit for shareholders. Doing so should result in higher rate risk too, but the swaps hedge out all the risk. IGBH seems like a marginally stronger investment opportunity than LQDH and is a buy.
IGBH - Overview and Analysis
Index and Portfolio
IGBH is an interest rate hedged long-term corporate bond ETF.
IGBH's long-term corporate bond exposure is gained through an investment in the iShares 10+ Year Investment Grade Corporate Bond ETF (NYSEARCA: IGLB ). IGLB is administered by BlackRock too, with the company waiving a significant portion of IGBH's fees. This results in a 0.14% expense ratio for the fund, below-average for a niche index ETF. As such, investors do not have to worry about excessive fees, which are quite common for fund of funds....
IGBH: Rate-Hedged Investment-Grade Bond ETF, Strong 7.5% Yield